Key Takeaways
- Tesla shares plunged Friday after the EV maker’s long-awaited robotaxi event failed to live up to investors’ expectations.
- The stock has retraced within a flag, a chart pattern that signals a continuation of the stock’s move higher in recent months.
- However, volumes remain below average, suggesting larger market participants may be sitting on the sidelines digesting the automaker’s October updates.
- Investors should watch key support levels on Tesla’s chart around $225, and $205, while monitoring overhead resistance areas near $265 and $300.
Tesla (TSLA) shares plunged Friday after the long-awaited unveiling of the EV maker’s self-driving Cybercab and other products fell short of investors’ expectations.
At an event late Thursday, Tesla CEO Elon Musk also introduced a Robovan, which can seat up to 20 passengers at a time or be used to transport goods, and showcased the automaker’s Optimus humanoid robot, which he touted as “the biggest product ever, of any kind.”
The stock was down 8% at around $220 in midday trading Friday as investors were hoping for more details on the company’s robotaxi plans and were disappointed Tesla didn’t reveal a new, lower-cost vehicle.
Tesla shares, which are now down about 12% since the start of the year, gained more than 30% in the third quarter as investors bid up the stock in anticipation of a solid third quarter deliveries report and the company’s robotaxi event. Tesla caps off a big month of updates when it reports third quarter earnings after the closing bell on Oct. 23.
Below, we take a closer look at Tesla’s chart and use technical analysis to identify important price levels worth watching out for.
Flag Pattern Signals Uptrend Continuation
Since bottoming out in early August, Tesla shares trended higher until early October before retracing within a flag, a chart pattern that signals a continuation of the stock’s move higher.
However, volumes remain below average, suggesting larger market participants, such as institutional investors and asset managers, may be sitting on the sidelines digesting the automaker’s October updates.
Looking ahead, investors should keep a close eye on several important support and resistance levels on Tesla’s chart that could come into focus.
Key Support Levels to Watch
The first area to watch is $225, where the shares may attract buying interest near the flag pattern’s lower trendline and 50-day moving average (MA), which also sits in close proximity to a trendline that extends back to early November last year.
Further selling could lead to a retest of lower support around $205, a location where investors may seek out entry points near several peaks and troughs that formed on the chart between October 2023 and August this year.
Important Resistance Levels to Monitor
A breakout above the flag pattern’s upper trendline could drive a move to the $265 area, where the shares may encounter overhead resistance from four prominent swing highs on the chart between October last year and October this year.
Finally, a more bullish move may see the shares test the $300 region, where investors who bought at lower levels could look to lock in profits near the stock’s 2023 high.
Interestingly, a bars pattern, which takes Tesla’s uptrend that preceded the flag and positions it from the pattern’s lower trendline, projects a price target just above this area.
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As of the date this article was written, the author does not own any of the above securities.